HARTFORD -- Connecticut's mayors say Gov. Dannel P. Malloy is balancing the state budget on the backs of towns and cities and forcing local officials to raise taxes.

Mayors from both big and small cities on Friday said Malloy's proposed $44 billion state budget does not "hold towns harmless," as the governor claims, and instead cuts municipal aid by $86 million and provides a $520 million loss in automobile taxes.

"If Gov. Malloy was still mayor of Stamford, he would be standing here with us," said Norwalk Mayor Richard Moccia during a news conference hosted by the Connecticut Conference of Municipalities.

Malloy stood his ground, insisting in a letter to towns and cities released Friday morning and during an afternoon news conference that his proposed budget does not reduce municipal aid to cities and towns.

"My plan sends at the least the same amount of state dollars to cities and towns as they currently receive. Its true aid comes in different ways, which will necessitate adjustments on your end," Malloy said.

Malloy's proposed budget does allocate roughly the same amount of municipal aid next year as this year. The spendng plan also increases education funding by $151 million over the next two years.

But Malloy is shifting tens of millions of dollars in traditional municipal aid, from sources like payments in lieu of taxes, municipal revenue sharing and the Pequot Fund, to education and capital projects, such as fixing roads and buying equipment.

That means millions in state funding local officials have relied on for years to balance budgets cannot be used to pay salaries and operating expenses. The mayors said Malloy's plan leaves big holes in their budgets and the only solutions are cutting services, laying off workers or raising taxes.

"Virtually all of us have raised taxes over the last few years," New Haven Mayor John DeStefano said.

"This takes $15 million out of our budget. That's 3.5 mills. Let's be honest, the state is in a jam. This is not harmless; it's a net revenue loss. I don't see how increasing property taxes will increase economic growth or promote academic health," DeStefano said.

Malloy admitted his proposal to eliminate taxes on vehicles valued under $28,500 will affect local budgets, saying the change offers middle class relief. But he said his budget also provides cities and towns an opportunity to choose spending priorities and use additional state money to buy a snowplow or fix a road.

"I understand that cities and towns will need to make their own hard decisions," Malloy said, adding the state must also ramp up spending on schools and students.

"We tolerated the failure in some school districts to graduate 40 percent of our students. We tried to say that if we don't get education running, we can't compete in the future. The state has not balanced its budget on the backs of municipalities," Malloy said.

The mayors, who are now putting together their own budgets for the next fiscal year, had a different view.

Bridgeport Mayor Bill Finch said Malloy's increased education money only sets up a battle with his school board over who gets the funds, the city or the Board of Education.

"I can't use capital money to pay police or firemen. Some of the impacts will be increased property taxes or fewer public safety personnel," Finch said.

"We are at the bone now and have nowhere to cut," Waterbury Mayor Neil O'Leary said. "Raising taxes and laying off people are the only options."